Formula One Is In 'Total Chaos' As CEO Bernie Ecclestone Faces Bribery Charges

Formula One insiders wonder how long CEO Bernie Ecclestone can remain in his role.
REUTERS/Kai Pfaffenbach
Bernie Ecclestone was on Wednesday night facing the greatest battle of his career after the Formula One chief executive was formally indicted by German prosecutors on bribery charges.

The announcement, after a 2½-year investigation by the Munich state prosecutor, sent shockwaves through the sport, with senior figures privately questioning how long the 82-year-old Ecclestone could continue in his current role.

Talks between F1's various stakeholders, including Ecclestone, are expected to take place over the coming days with one source describing the situation as "total chaos".

Ecclestone is still in negotations with teams and the governing body, the FIA, over the latest Concorde Agreement, the commercial pact which binds Formula One, a delicate state of play which may explain why so few within the sport were prepared to speak publicly yesterday.

Daimler AG, Mercedes' parent company, was one notable exception, reiterating the position it adopted last summer when it admitted its board's deep unease over the allegations in Germany.

"Compliance is of central importance for Daimler," it said in a statement. "We support the clarification of the allegations against the CEO of Formula One. We will now consult with the other partners in the sport of Formula One [Teams, FIA, F1 stakeholders] on the contents of the proceedings and the next steps, before commenting further."

Daimler chief finance officer Bodo Uebber sits on the F1 board.

Formula One's largest shareholder, the private equity firm CVC Capital Partners, is sure to come under intense pressure from investors and is unlikely to be thrilled by the prospect of a court case in Germany.

For a start, any plans to float the sport on the Singapore stock exchange, as Ecclestone wanted to do last year, will surely be put on the back-burner again.

CVC sold off a large chunk of its equity in the sport last year, which was seen by many as a pre-emptive measure aimed at reducing its exposure should Ecclestone be charged, or eventually convicted of bribery.

Last year it emerged in its flotation prospectus that it already begun the search for a new CEO, appointing headhunters Egon Zehnder to identify possible successors.

CVC declined to comment on Wednesday night although board member Sir Martin Sorrell, the founder of advertising agency WPP, has been deeply critical of Ecclestone in the past, accusing him of being "totally out of touch with reality".

Ferrari president Luca di Monteze­molo has also been extremely vocal on the subject of Ecclestone's future. Montezemolo said last December that he fully expected Ecclestone to step down as CEO "in the interests of the sport" should he be charged.

"First of all, I hope for Bernie and F1 that nothing will happen," the Italian said. "If Bernie is accused under process [formally charged with an offence] I think he will be the first to step back in the interests of Formula One. This could be bad for F1."

Montezemolo added that Ecclestone's era was "slowly approaching" its end. Ferrari declined to comment on Wednesday or to clarify whether their president stood by those remarks.

Ecclestone, who is facing a separate case in London's High Court from Constantin Medien, a former F1 shareholder who claims his stake was undervalued, has always denied paying German banker Gerhard Gribkowksy bribes to facilitate the sale of the sport to CVC seven years ago.

He insists that he was blackmailed by the former chief risk officer of Bayern LB, who threatened to cause problems for him with the British tax authorities. Gribkowksy was sentenced last year to 8½ years in jail after confessing to tax evasion, breach of trust and being in receipt of corrupt payments.

Ecclestone, who leaked the news of his indictment himself on Wednesday, said it was "a pity" that it had come to this. "We are defending it properly," he told the Financial Times. "It will be an interesting case. It's a pity it's happened."

Ecclestone added it was "inevitable" that the indictment had been served. "If someone wants to sue you, they can do it and you have to defend it." He told the FT that he had not been offered a way to settle the case financially.

The Munich state prosecutor's office revealed in its own statement that the indictment was in fact dated May 10 and had since been translated into English and delivered to Ecclestone and his lawyers and that he had until mid-August to respond. It added that a decision will then be taken on whether to proceed to trial.